- Revenue grew 20% to a record $146.8 million with organic growth
of 17% on a constant currency basis for the quarter
- Gross margin was 31.3% with operating income up 60% to a record
$12.0 million, up 210 basis points
- Net income up 48% to $6.8 million or $0.42 per diluted
share
- Adjusted net income up 23% to $0.58 per share
- Generated $13.7 million of cash from operations and reduced
debt balance $9.4 million during the quarter
Allied Motion Technologies Inc. (Nasdaq: AMOT) (“Allied Motion”
or “Company”), a designer and manufacturer of precision and
specialty controlled motion products and solutions for the global
market, today reported financial results for its second quarter
ended June 30, 2023. Results include the acquisitions completed
during the second quarter of 2022.
“Driving overall margin improvement continues to be an emphasis
within Allied and while we did experience a slight contraction in
our gross margin, primarily due to mix, our operating leverage
improvements delivered record operating income of $12.0 million and
a 210 basis point improvement for the quarter. Once again, we
delivered record sales and strong organic growth of 17% for the
quarter. Industrial Markets were up 39% over last year’s second
quarter, largely driven by industrial automation projects and power
quality solutions. Solid demand from our other target market
verticals also contributed to our overall sales growth in the
quarter,” commented Dick Warzala, Chairman and CEO.
He added, “While we have experienced positive improvements in
the supply chain, which has helped to reduce our backlogs, we do
expect some near-term challenges with macro-economic softness in
parts of Europe. For the long term, we still see tremendous
opportunities for growth and value creation across our global
platform. Ultimately, we have confidence that we can continue to
successfully execute our proven strategy well into the future.”
Second Quarter 2023 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue increased 20%, or $24.0 million, to a record $146.8
million and reflected higher demand across most target markets and
incremental revenue from acquisitions completed during last year’s
second quarter. Excluding the unfavorable impact of foreign
currency exchange rate fluctuations on revenue of $0.4 million,
organic growth was 17%. Sales to U.S. customers were 58% of total
sales for the second quarter of 2023 and 2022, with the balance of
sales to customers primarily in Europe, Canada and Asia-Pacific.
See the attached table for a description of non-GAAP financial
measures and reconciliation of revenue excluding foreign currency
exchange rate fluctuations.
Industrial markets sales were up 39% in the quarter, benefiting
from strong end market demand within industrial automation,
material and vehicle handling, oil & gas, and HVAC. Aerospace
& Defense sales increased 11%, which reflected incremental
contributions from acquisitions. Sales in the Vehicle markets
increased 7%, as higher commercial automotive and powersports
demand more than offset lower demand within agricultural vehicles.
Medical market revenue was up 3% due to higher demand for medical
mobility. Sales through the Distribution channel increased 17%.
Gross margin was 31.3%, down 110 basis points from the
prior-year period as higher volume was more than offset by
unfavorable mix and continued raw material pricing increases.
Operating costs and expenses were 23.2% of revenue, down 310
basis points, which reflected the operating leverage obtained from
strong revenue growth, including the successful integration of
recent acquisitions. As a result, operating income increased 60% to
$12.0 million compared with $7.5 million, and as a percent of
revenue was 8.2%, up 210 basis points.
Net income increased 48% to $6.8 million, or $0.42 per diluted
share, from $4.6 million, or $0.29 per share, in the prior-year
period. Adjusted net income, which excludes amortization of
intangible assets related to acquisitions, business development
costs and other non-recurring items, increased to $9.5 million, or
$0.58 per diluted share, compared with adjusted net income of $7.7
million, or $0.48 per diluted share. The effective tax rate was
23.9% in the second quarter of 2023, which reflected discrete tax
benefits of 1.6% in the period. The Company expects its income tax
rate for the full year 2023 to be approximately 24% to 26%. See the
attached tables for a description of non-GAAP financial measures
and reconciliation table for Adjusted Net Income and Diluted
Earnings per Share.
Earnings before interest, taxes, depreciation, amortization,
stock-based compensation expense, business development costs, and
foreign currency gains/losses (“Adjusted EBITDA”) was $20.4
million, up $4.2 million, or 26%. As a percentage of revenue,
Adjusted EBITDA was 13.9%, up 70 basis points. The Company believes
that, when used in conjunction with measures prepared in accordance
with U.S. generally accepted accounting principles, Adjusted
EBITDA, which is a non-GAAP measure, helps in the understanding of
its operating performance. See the attached table for a description
of non-GAAP financial measures and reconciliation table for
Adjusted EBITDA.
Year-to-Date (YTD) 2023 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue of $292.3 million increased $54.8 million, or 23%,
reflecting strong demand in Industrial and Aerospace & Defense
markets, and incremental sales from acquisitions. The impact of
foreign currency exchange fluctuations was unfavorable by $3.7
million for the year-to-date period. Sales to U.S. customers were
57% of total sales, equal to the percent of sales for the same
period last year, with the balance of sales to customers primarily
in Europe, Canada and Asia-Pacific.
Gross margin was 31.4%, up 60 basis points due to higher volume
and margin accretive acquisitions, which more than offset recent
unfavorable mix. Operating costs and expenses as a percent of
revenue were 23.4%, down 250 basis points, due to operating
leverage and decreased business development costs. As a result,
operating income was $23.4 million, or 8.0% of sales, compared with
$11.8 million, or 5.0% of sales.
Net income increased to $13.1 million, or $0.81 per diluted
share, compared with $7.1 million, or $0.45 per diluted share.
Excluding amortization of intangible assets related to
acquisitions, business development costs and other non-recurring
items, adjusted net income was $18.4 million, or $1.14 per diluted
share, compared with $13.4 million, or $0.85 per diluted share, in
the comparable period of 2022. Adjusted EBITDA increased to $39.4
million from $29.1 million, and as a percent of revenue was 13.5%,
up 120 basis points.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $24.1 million compared with $30.6
million at year-end 2022. The change largely reflects a $6.25
million deferred payment made during the first quarter of 2023 for
a prior acquisition.
Cash provided by operating activities was $17.3 million for the
year-to-date period compared with cash usage of $0.3 million in the
prior-year period. The increase reflected higher net income and
stronger inventory turns. Capital expenditures were $6.1 million
year-to-date and largely focused on new customer projects. The
Company expects 2023 capital expenditures to be in the range of $16
million to $20 million.
Total debt of $227.5 million was down $8.3 million from year-end
2022. Debt, net of cash, was $203.4 million, or 46.2% of net debt
to capitalization. The Company’s leverage ratio, as defined in its
credit agreement, was 3.06x at quarter-end.
Orders and Backlog Summary ($ in thousands)
Q2
2023
Q1
2023
Q4
2022
Q3
2022
Q2
2022
Orders
$
137,008
$
123,198
$
145,564
$
126,158
$
139,209
Backlog
$
298,695
$
308,635
$
330,078
$
310,186
$
323,873
Foreign currency translation had an unfavorable $0.4 million
impact on second quarter orders compared with the prior-year
period. The second quarter orders represented a book-to-bill ratio
of 0.9x.
Backlog decreased 3% from the sequential first quarter of 2023
reflecting more normal levels as improvements continued within the
supply chain environment. The time to convert the majority of the
backlog to sales is approximately three to nine months.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
August 3, 2023 at 10:00 am ET. During the conference call,
management will review the financial and operating results and
discuss Allied Motion’s corporate strategy and outlook. A question
and answer session will follow.
To listen to the live call, dial (412) 317-5185. In addition,
the webcast and slide presentation may be found at:
www.alliedmotion.com/investor-relations.
A telephonic replay will be available from 2:00 pm ET on the day
of the call through Thursday, August 10, 2023. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
10180165 or access the webcast replay via the Company’s website. A
transcript will also be posted to the website once available.
About Allied Motion Technologies Inc.
Allied Motion (Nasdaq: AMOT) designs, manufactures and sells
precision and specialty-controlled motion products and solutions
that are used in a broad range of applications within the
Industrial, Vehicle, Medical, and Aerospace & Defense Markets.
Headquartered in Amherst, NY, the Company has global operations and
sells into markets across the United States, Canada, South America,
Europe and Asia-Pacific.
Allied Motion is focused on controlled motion applications and
is known worldwide for its expertise in electro-magnetic,
mechanical, and electronic controlled motion technologies. Its
products include nano precision positioning systems, servo control
systems, motion controllers, digital servo amplifiers and drives,
brushless servo, torque, and coreless motors, brush motors,
integrated motor-drives, gear motors, gearing, incremental and
absolute optical encoders, active (electronic) and passive
(magnetic) filters for power quality and harmonic issues,
Industrial safety rated I/O Modules, Universal Industrial
Communications Gateways, light-weighting technologies, and other
controlled motion-related products.
The Company’s growth strategy is focused on becoming a leading
global controlled motion solution provider in its selected target
markets by further developing its products and services platform to
utilize multiple Allied Motion technologies which create increased
value solutions for its customers. The Company routinely posts news
and other important information on its website at
www.alliedmotion.com.
Safe Harbor Statement
The statements in this news release and in the Company’s August
3, 2023 conference call that relate to future plans, events or
performance are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate, or imply future
results, performance, or achievements. Examples of forward-looking
statements include, among others, statements the Company makes
regarding expected operating results, anticipated levels of capital
expenditures, the Company’s belief that it has sufficient liquidity
to fund its business operations, and expectations with respect to
the conversion of backlog to sales. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on the Company’s current beliefs,
expectations and assumptions regarding the future of the Company’s
business, future plans and strategies, projections, anticipated
events and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of the
Company’s control. The Company’s actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, general economic and business conditions,
conditions affecting the industries served by the Company and its
subsidiaries, conditions affecting the Company's customers and
suppliers, competitor responses to the Company's products and
services, the overall market acceptance of such products and
services, the pace of bookings relative to shipments, the ability
to expand into new markets and geographic regions, the success in
acquiring new business, the impact of changes in income tax rates
or policies, the severity, magnitude and duration of the COVID-19
pandemic, including impacts of the pandemic and of businesses’ and
governments’ responses to the pandemic on our operations and
personnel, and on commercial activity and demand across our and our
customers’ businesses, and on global supply chains; our inability
to predict the extent to which the COVID-19 pandemic and related
impacts will continue to adversely impact our business operations,
financial performance, results of operations, financial position,
the prices of our securities and the achievement of our strategic
objectives, the ability to attract and retain qualified personnel,
the ability to successfully integrate an acquired business into our
business model without substantial costs, delays, or problems, and
other factors disclosed in the Company's periodic reports filed
with the Securities and Exchange Commission. Any forward-looking
statement speaks only as of the date on which it is made. New risks
and uncertainties arise over time, and it is not possible for us to
predict the occurrence of those matters or the manner in which they
may affect us. The Company has no obligation or intent to release
publicly any revisions to any forward looking statements, whether
as a result of new information, future events, or otherwise.
FINANCIAL TABLES FOLLOW
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share data)
(Unaudited)
For the three months
ended
For the six months
ended
June 30,
June 30,
2023
2022
2023
2022
Revenue
$
146,769
$
122,722
$
292,318
$
237,507
Cost of goods sold
100,792
82,948
200,507
164,273
Gross profit
45,977
39,774
91,811
73,234
Operating costs and expenses:
Selling
6,301
5,808
12,333
10,839
General and administrative
14,162
12,595
28,982
24,091
Engineering and development
9,952
9,791
20,339
19,177
Business development
400
1,417
597
2,265
Amortization of intangible assets
3,142
2,645
6,151
5,079
Total operating costs and expenses
33,957
32,256
68,402
61,451
Operating income
12,020
7,518
23,409
11,783
Other expense, net:
Interest expense
3,162
1,525
6,145
2,563
Other (income) expense, net
(42
)
(279
)
145
(234
)
Total other expense, net
3,120
1,246
6,290
2,329
Income before income taxes
8,900
6,272
17,119
9,454
Income tax provision
(2,131
)
(1,691
)
(4,035
)
(2,370
)
Net income
$
6,769
$
4,581
$
13,084
$
7,084
Basic earnings per share:
Earnings per share
$
0.42
$
0.30
$
0.82
$
0.47
Basic weighted average common shares
15,969
15,355
15,921
15,226
Diluted earnings per share:
Earnings per share
$
0.42
$
0.29
$
0.81
$
0.45
Diluted weighted average common shares
16,219
15,932
16,178
15,752
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
(Unaudited)
June 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
24,120
$
30,614
Trade receivables, net of provision for
credit losses of $1,155 and $1,192 at June 30, 2023 and December
31, 2022, respectively
87,245
76,213
Inventories
116,098
117,108
Prepaid expenses and other assets
11,781
12,072
Total current assets
239,244
236,007
Property, plant, and equipment, net
68,518
68,640
Deferred income taxes
3,765
4,199
Intangible assets, net
113,160
119,075
Goodwill
127,987
126,366
Operating lease assets
21,852
22,807
Other long-term assets
10,968
11,253
Total Assets
$
585,494
$
588,347
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
42,368
$
39,467
Accrued liabilities
45,389
48,121
Total current liabilities
87,757
87,588
Long-term debt
227,106
235,454
Deferred income taxes
6,024
6,262
Pension and post-retirement
obligations
2,861
3,009
Operating lease liabilities
17,557
18,795
Other long-term liabilities
7,395
21,774
Total liabilities
348,700
372,882
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 16,268 and 15,978 shares issued and outstanding at
June 30, 2023 and December 31, 2022, respectively
92,483
83,852
Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or outstanding
—
—
Retained earnings
155,772
143,576
Accumulated other comprehensive loss
(11,461
)
(11,963
)
Total stockholders’ equity
236,794
215,465
Total Liabilities and Stockholders’
Equity
$
585,494
$
588,347
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
For the six months
ended
June 30,
2023
2022
Cash Flows From Operating
Activities:
Net income
$
13,084
$
7,084
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation and amortization
12,535
12,531
Deferred income taxes
(14
)
1,222
Stock-based compensation expense
2,811
2,490
Debt issue cost amortization recorded in
interest expense
150
71
Other
685
793
Changes in operating assets and
liabilities, net of acquisitions:
Trade receivables
(11,151
)
(15,407
)
Inventories
832
(22,003
)
Prepaid expenses and other assets
287
1,601
Accounts payable
2,822
9,850
Accrued liabilities
(4,768
)
1,478
Net cash provided by (used in) operating
activities
17,273
(290
)
Cash Flows From Investing
Activities:
Consideration paid for acquisitions, net
of cash acquired
(6,250
)
(44,569
)
Purchase of property and equipment
(6,118
)
(6,354
)
Net cash used in investing activities
(12,368
)
(50,923
)
Cash Flows From Financing
Activities:
Proceeds from issuance of long-term
debt
4,000
64,203
Principal payments of long-term debt and
finance lease obligations
(12,567
)
(3,406
)
Dividends paid to stockholders
(872
)
(776
)
Tax withholdings related to net share
settlements of restricted stock
(1,653
)
(1,240
)
Net cash (used in) provided by financing
activities
(11,092
)
58,781
Effect of foreign exchange rate changes on
cash
(307
)
(1,185
)
Net (decrease) increase in cash and cash
equivalents
(6,494
)
6,383
Cash and cash equivalents at beginning of
period
30,614
22,463
Cash and cash equivalents at end of
period
$
24,120
$
28,846
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures (In
thousands) (Unaudited)
In addition to reporting revenue and net income, which are U.S.
generally accepted accounting principle (“GAAP”) measures, the
Company presents Revenue excluding foreign currency exchange rate
impacts, and EBITDA and Adjusted EBITDA (earnings before interest,
income taxes, depreciation and amortization, stock-based
compensation expense, business development costs, and foreign
currency gains/losses), which are non-GAAP measures.
The Company believes that Revenue excluding foreign currency
exchange rate impacts is a useful measure in analyzing organic
sales results. The Company excludes the effect of currency
translation from revenue for this measure because currency
translation is not under management’s control, is subject to
volatility and can obscure underlying business trends. The portion
of revenue attributable to currency translation is calculated as
the difference between the current period revenue and the current
period revenue after applying foreign exchange rates from the prior
period.
The Company believes EBITDA and Adjusted EBITDA are often a
useful measure of a Company’s operating performance and are a
significant basis used by the Company’s management to evaluate and
compare the core operating performance of its business from period
to period by removing the impact of the capital structure
(interest), tangible and intangible asset base (depreciation and
amortization), taxes, stock-based compensation expense, business
development costs, foreign currency gains/losses on short-term
assets and liabilities, and other items that are not indicative of
the Company’s core operating performance. EBITDA and Adjusted
EBITDA do not represent and should not be considered as an
alternative to net income, operating income, net cash provided by
operating activities or any other measure for determining operating
performance or liquidity that is calculated in accordance with
GAAP.
The Company’s calculation of Revenue excluding foreign currency
exchange impacts for the three and six months ended June 30, 2023
is as follows:
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2023
Revenue as reported
$
146,769
$
292,318
Foreign currency impact
410
3,662
Revenue excluding foreign currency
exchange impacts
$
147,179
$
295,980
The Company’s calculation of Adjusted EBITDA for the three and
six months ended June 30, 2023 and 2022 is as follows:
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net income
$
6,769
$
4,581
$
13,084
$
7,084
Interest expense
3,162
1,525
6,145
2,563
Provision for income tax
2,131
1,691
4,035
2,370
Depreciation and amortization
6,390
6,096
12,535
12,531
EBITDA
18,452
13,893
35,799
24,548
Stock compensation expense
1,544
1,141
2,811
2,490
Foreign currency (gain) loss
(15
)
(254
)
199
(203
)
Business development costs
400
1,417
597
2,265
Adjusted EBITDA
$
20,381
$
16,197
$
39,406
$
29,100
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of GAAP Net Income and Diluted Earnings per Share
to Non-GAAP Adjusted Net Income and Adjusted Diluted
Earnings per Share (In thousands, except per share data)
(Unaudited)
The Company’s calculation of Adjusted net income and Adjusted
diluted earnings per share for the three and six months ended June
30, 2023 and 2022 is as follows:
Three Months Ended
June 30,
2023
Per diluted share
2022
Per diluted share
Net income as reported
$
6,769
$
0.42
$
4,581
$
0.29
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets -
net
2,407
0.14
2,233
0.14
Foreign currency gain/ loss - net
(11
)
-
(194
)
(0.01
)
Business development costs - net
306
0.02
1,085
0.06
Adjusted net income and adjusted diluted
EPS
$
9,471
$
0.58
$
7,705
$
0.48
Weighted average diluted shares
outstanding
16,219
15,932
Six Months Ended
June 30,
2023
Per diluted share
2022
Per diluted share
Net income as reported
$
13,084
$
0.81
$
7,084
$
0.45
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets -
net
4,712
0.29
4,693
0.30
Foreign currency gain/ loss - net
152
0.01
(155
)
(0.01
)
Business development costs - net
457
0.03
1,735
0.11
Adjusted net income and adjusted diluted
EPS
$
18,405
$
1.14
$
13,357
$
0.85
Weighted average diluted shares
outstanding
16,178
15,752
___________________
(1)
Applies a blended federal, state, and
foreign tax rate of approximately 23% applicable to the non-GAAP
adjustments.
Adjusted net income and diluted EPS are defined as net income as
reported, adjusted for certain items, including amortization of
intangible assets and unusual non-recurring items. Adjusted net
income and diluted EPS are not a measure determined in accordance
with GAAP in the United States, and may not be comparable to the
measure as used by other companies. Nevertheless, the Company
believes that providing non-GAAP information, such as adjusted net
income and diluted EPS are important for investors and other
readers of the Company’s financial statements and assists in
understanding the comparison of the current quarter’s and current
year’s net income and diluted EPS to the historical periods’ net
income and diluted EPS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802878852/en/
Investor Contact: Deborah K. Pawlowski / Craig P.
Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com cmychajluk@keiadvisors.com
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